The Association of Mutual Funds in India (AMFI) said that as of June 30, 2022, the number of systematic investment plan (SIP) accounts has hit an all-time high of 5.54 crore. According to AMFI data, there were 17.92 lakh SIPs registered in June 2022, and SIP Assets Under Management (AUM) reached Rs 5.51 lakh crore at that time.
A regular mutual fund investment can be made by an investor thanks to the systematic investment plan (SIP). This is a boon for investors who do not have a lump sum or are hesitant to make a lump-sum investment. SIPs are also among the most effective and economical strategies to invest in mutual funds. When investing in these programs, the following advice should assist you in making the best decision. Learn about each category to see if it fits your risk tolerance and investing goals.
An investor can regularly invest in mutual funds thanks to the systematic investment plan (SIP). Investors who lack or are afraid to invest in lump sums will benefit from this. Additionally, SIPs are among the most effective and affordable strategies to invest in mutual funds. When investing in these schemes, the following advice should help you choose wisely. Learn about each category to see if it fits your financial goals and risk tolerance.
HDFC Top 100 has a greater beta than the category average for large-size funds. One of the highest equity allocations in the category, the fund has 97% of its assets invested in large-size companies. In three years, five years, and ten years, the fund has produced returns of 15.8%, 11.23%, and 13.86%, respectively.
Another option is to invest in large and midcap funds. The ICICI Prudential Large & Midcap Fund falls under this category. The fund did well due to the ongoing interest in banking companies and increased allocation in the auto sectors. Recently, both indices have outperformed. In terms of performance, the fund generated returns of 22.48%, 12.97%, and 15.06% over three, five, and ten years, respectively.
How about risk-takers who invest aggressively in order to increase their returns? A safe bet is a midcap or small-cap plan. While small-cap funds invest mostly in larger companies, mid-cap funds primarily invest in medium-sized businesses. These schemes’ returns might fluctuate, but they might also be better in the long run. For people with a long investment horizon and a high-risk tolerance, investing in these mutual fund categories makes sense.
Canara Robeco Small Cap Fund and SBI Magnum Midcap Fund are two options. SBI Magnum Midcap Fund consistently delivers impressive results. The fund employs a bottom-up methodology and emphasises both value and growth investment. In three years, five years, and ten years, the fund has produced returns of 30.72%, 14.08%, and 20.77%, respectively. Canara Robeco Small Cap Fund was introduced in 2019, almost 3.5 years ago, making it relatively new. The fund focuses on high-caliber businesses that can profit from new trends, have a strong balance sheet, and can deliver visible earnings growth. In terms of returns, the fund generated 21.65%, 49.34%, and 39.62% over a one-year, two-year, and three-year time frame, respectively.
There is still a lot of misinformation concerning quantitative techniques, which are still thought to be risky and more likely to suffer significant losses during market crashes. This has no basis in reality. Risk management is a feature of quant-driven portfolio designs. An investment option is a multi-cap fund, Quant Active Fund. The fund offers a distinct approach to investing. The fund managers analyse entrance and exit in equities by using analytical methods to identify episodes of greed and fear, euphoria and capitulation. The fund uses the VLRT (Valuation, Liquidity, Risk and Timing) framework and favours taking calculated risks. In one year, two years, and three years, respectively, Quant Active Fund has generated returns of 35.42%, 21.58%, and 21.21%.
By beginning your search with the word “best,” it is unlikely that you will find the best answer. Make sure the scheme you select is compatible with your investment goals, time horizon, and risk tolerance. If you are unfamiliar with the fundamentals of mutual funds or are completely new to investing and mutual funds, you should always seek assistance from a mutual fund advisor.
(By Abhinav Angirish, Founder, Investonline.in)
Disclaimer: This is the author’s personal opinion. Readers are advised to consult their financial planner before making any investment.